SteelMint: India pellet export index falls to over three-month low in absence of active trade

SteelMint's India pellet (Fe 63%, 3% Al) export index FOB east coast was recorded at $109/tonne (t), decreasing by $3/t w-o-w, due to low demand in China and bid-offer disparity. The index has fallen to over three-month low. These levels were last seen in early Jan'23.

Limited deals were heard and concluded this week. As per sources, an Odisha-based pellet maker concluded a deal for Fe 62.5% at $122-123/t CFR China recently but it was not confirmed by the seller till the time of publication of the report.

Realizations in the domestic market are still higher than those in exports. This has held back Indian manufacturers and they are not very aggressive in exports. Few manufacturers are still looking for higher bids of $130-135/t CFR China.

Pellet export shipments at Indian ports fall

India's pellet export shipments were recorded at 116,350 t in the second week of April in comparison with around 300,000 t in the first week of the month, as per vessel line-up data maintained with SteelMint. Shipments were seen only from Paradip port this week.

Rationale

• No deal was recorded this week and, thus, given 0% weightage in index calculation.
  
  
• Eight (8) indicative offers and bids were received, and all were considered for calculation of the index, given 100% weightage.
  
  

Market highlights-

• Domestic market realisations better than exports: Domestic pellet (Fe 63%) prices stood at INR 9,300/t loaded on to wagon for Barbil, eastern India. On the other hand, SteelMint's pellet export ex-plant price realization for the Barbil region dropped further by INR 400/t w-o-w to INR 7,000-7,100/t this week.
  
  
• Global iron ore prices edge down w-o-w: The benchmark Fe 62% fines index decreased by $1.55/t on 18 April to $120.45/t CFR China as against $122/t, a week ago. Prices decreased w-o-w on poor steel demand. Iron ore market players have been on edge due to the unpredictable weather in Western Australia. Cyclone Ilsa is predicted to disrupt operations and vessel shipments, although having little effect on seaborne pricing.
  
  
• DCE iron ore futures stable w-o-w: Iron ore futures on the Dalian Commodity Exchange (DCE) for September 2023 contract closed at RMB 777.5 /t on 19 April (at 3 pm), decreasing by RMB 21/t ($3/t) against RMB 798.5/t on 12 April. Prices inched down by RMB 6.5/t d-o-d against RMB 784/t a day before.
  
  
• Pellet port inventories in China largely stable: Pellet inventory at China's major ports stood at 7.15 mnt this week, largely stable compared to 7.2 mnt last week.
  
  

Outlook

Currently, Indian pellet manufacturers are getting better realisations in the domestic market. Exports may only regain momentum if bids from China increase by around $5-10/t than the current levels, SteelMint notes.